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President Vladimir Putin: Good day, esteemed colleagues,

As I am here in Karelia, I would like to take this opportunity to congratulate all the people of Karelia and above all the residents of Petrozavodsk with the recent holiday. I am sure that everyone here loves and appreciates their capital, and that all of you here today join me in these congratulations.

Now to get directly to the subject. First, I would like to thank the directors of the enterprise and the ministry for explaining the sector’s activities in such an interesting way. If everything you told me does indeed go ahead throughout the sector, then I think this will mark a noticeable step forward.

People in Karelia know very well what positive changes have taken place in the sector over recent years, and also know just what problems the forestry industry faces, because Karelia is one of the country’s traditional timber-producing regions. The head of the government and I have just had an in-depth discussion here on the state of affairs in Karelia and the situation in the forestry industry.

Russia has almost a quarter of the world’s timber resources. In this sense, it would be no exaggeration to say that Russia’s forests form the planet’s ecological shield. I was very pleased to hear from the specialists here about what is being done to replenish, clean and protect our forests. Unfortunately, we still have many problems in this respect, but let’s remember here what Russian scientists and forestry specialists were saying back in the nineteenth century. They introduced this concept of sustainable and non-exhaustive use of forestry resources, and I think that this principle still applies entirely today.

In this context, I’d like to look at the important question of raising the money to replenish and protect our forests. This burden lies primarily on the timber enterprises, but we know that they unfortunately do not all have the financial and other resources to fully meet these obligations. You are aware of the discussions that have taken place on this matter, and of the plans we have. There are various points of view on how to improve the situation in this area. One proposal is to have the timber users cover the costs of replenishing the forests. Land rental costs and forestry taxes, meanwhile, would be set through auctions and tenders. This proposal is still being discussed, so we should reflect on it, and I would like to hear your views on it today.

Another problem is protecting forests from fires, diseases and illegal logging. How many fires are currently burning at the moment? At the moment Russia has 436 forest fires burning. And how much forest does this represent? It represents around 12,000 hectares. Unfortunately, these negative trends have been increasing over recent years. I’m speaking here not just of fires, but also of diseases and illegal logging. We must improve our work in preventing these trends. First of all, we must coordinate the work of the different agencies involved. I know that there are some traditional proposals for improving the way things are run and setting up additional, unified structures. We can discuss this today if you think it necessary. One of the tools we have to help ensure effective use of our forestry resources is customs tariff regulation. We also discussed this issue in depth today. There is constant discussion on the matter. There is a proposal to examine the possibility of lowering export duties for heavily processed timber products and to increase duties on raw timber.

I agree with those who say that there should be differentiation between the types of unprocessed timber. Perhaps we shouldn’t try to apply the same treatment in every single case, but I think that the principle is good. This has been much discussed in the government. I hope that the deputy minister for economic development and trade, who is here today, will inform us where this issue stands today. Everyone agrees that this is the right approach, but unfortunately, nothing, or almost nothing, has been done yet.

Another major problem is attracting investment to develop the forestry industry. There is very little investment today, and in some cases no investment at all, in timber enterprises’ fixed capital. Specialists say that already tried and tested principles such as concessions or long-term rent of tracts of forest could encourage more investment. To a large extent this is a question of legislation, and the government has also been giving it its attention. In particular, work is going ahead on drafting a new forestry code. The draft code is almost ready, and I’m sure you are aware of its main provisions. Let us also discuss this today.

We have a lot of different issues to examine today, and I wouldn’t want us to leave anything out. We spoke of investment, and where I mentioned customs policy, we also returned repeatedly to the need to lower customs barriers for importing equipment that we ourselves do not produce. Here there is always a struggle going on between the government’s fiscal interests and the interests of economic development. I think that we in a situation today when economic development should definitely be our priority. We do have some plans in this respect, and I think that our colleagues from the government will enlighten us on them in more detail. That is what I wanted to say for a start. Now let’s listen to the deputy minister for economic development and trade, and then we will listen to the first deputy natural resources minister. After that, we can exchange information and views on the problems we have come here to study today.

Thank you.